Obama’s student loan plan wins support in House

By eSchool News

July 13th, 2009

The chairman of the House Education Committee has dismissed a last-ditch plea from the private student loan industry and is throwing his support behind President Obama’s plan to end the role of private banks in the federal education lending systems, reports the New York Times. Obama’s plan remains deeply contentious in Congress, and still faces strong opposition from private banks that for decades have earned big profits for handling federal student loans. But after mulling the issue for months, Rep. George Miller, D-Calif., now plans to introduce legislation next week that would rely on direct government lending to replace the federally subsidized loans made by private banks. Administration officials who have reviewed drafts of the legislation say it substantially adopts Obama’s proposal. The industry had urged Congress and the White House to consider its own alternative. But Congressional Democrats, the White House, and officials at the federal Education Department have rejected that plan, contending that it was based on accounting tricks and would pour $15 billion into the banks’ coffers that Obama would direct to the Pell grant program for low-income students…